RFID creates market for suppliers

The recent push by retailers to introduce radio frequency identification (RFID) tagging into supply chains has not only sparked a...

The recent push by retailers to introduce radio frequency identification (RFID) tagging into supply chains has not only sparked a frenzy of RFID-related activity by suppliers needing to satisfy retailer demands, it has also created a market for service providers offering to aid in implementation.

Hewlett-Packard, for example, has introduced three RFID services and said it expected the market to grow from $1bn to $3bn by 2008.

On top of the range of RFID consulting and integration services it already offers, HP is now introducing a Discovery Service, to help customers design their RFID strategy, an RFID Adaptive Starter Kit for building a proof of concept and RFID Readiness Assessment and Roadmap Planning for customers keen to develop and implement the technology.

RFID, which is being used by companies to track the shipment and delivery of products in an effort to cut costs through inventory control, is a perfect example of HP's Adaptive Enterprise strategy, according to Salil Pradhan, chief technology officer of the company's RFID programme.

"Fundamentally, what RFID is all about is collecting data at an operations level by looking at the physical layer and then applying that to the business layer," Pradhan said.

Use of the technology creates a potential boon for suppliers selling related hardware, software and services. Recent mandates issued by heavyweight retailers such as Wal-Mart  for their suppliers to get RFID ready have only hastened adoption of the technology.

Last year Wal-Mart set a January 2005 date for their top 100 suppliers to start using RFID tagging at a case and pallet level, and began the march toward that goal late last month with a trial in seven stores and a distribution centre in Texas.

"Wal-Mart has clearly given a strong push to the market. RFID has been used for a number of years in closed loops of supply chains but now it is being considered for open loops," Pradhan said.

HP has been working closely with Wal-Mart on RFID as a supplier, and will continue co-operation under the banner of the EPCglobal group, which is working to define international standards for RFID standards. HP has joined the board of EPCglobal.

Microsoft, Sun Microsystems and others have also laid out RFID initiatives.

Last week Sun opened a plant in Dallas to test radio tags for tracking consumer products and inventory control, and will open a similar plant in Scotland in coming months. Sun is also working with Wal-Mart suppliers to help them meet the January deadline.

Computing Technology Industry Association (CompTIA) has launched its own RFID initiative, aiming to examine how RFID will impact the computer and electronics supply chain, to plan interaction with adjacent supply chains and to provide ongoing RFID education and training.

David Sommer, vice-president of eCommerce at CompTIA, said that the work under the initiative will largely be defined by the group's members, to address their concerns and needs.

 "RFID has caught the attention of a lot of people and our members have come forward, asking for ways to address the challenges," Sommer said.

CompTIA hoped that by working together, its members can define the needs and challenges of its particular industry as well as those of implementation.

Scarlet Pruitt writes for IDG News Service

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